According to a research study from Forrester, EDI continues to prove its worth as an electronic message data format. This research states that “the annual volume of global EDI transactions exceeds 20 billion per year and is still growing.”
As a shipper in today’s growing market, there are many advantages to shifting to the use of transportation EDI with your transportation providers or 3PLs. If you are unfamiliar with the concept of EDI, read our first post in this series on what is EDI in transportation and how it works, but as a quick recap, essentially, EDI takes human interaction out of the equation completely, and lets technology take over.
EDI isn’t a new technology in and of itself. In fact, some industries, such as trucking, automotive, finance, and even government have been using EDI for years. However, now that shippers (and consumers) are making the shift to doing more and more of their everyday tasks through computer technology, transportation EDI is the obvious choice for companies who want to be in on this rapidly growing trend in transportation technology. There are many benefits of transportation EDI which are a value added service via a transportation management system offered by transportation providers or 3PLs.
4 Main Benefits of Transportation EDI Utilized by Shippers within a TMS
For shippers or 3PLs that handle numerous transactions, using EDI, typically within a TMS, can result in millions of dollars of annual savings due to early payment discounts. From a financial perspective alone, there are impressive benefits from implementing EDI. Exchanging documents electronically improves transaction speed and visibility while decreasing the amount of money you spend on manual processes. But cost savings is far from the only benefit of using transportation EDI in a TMS.
But let’s start with Cost Savings anyway:
- Expenses associated with paper, printing, reproduction, storage, filing, postage and document retrieval are all reduced or eliminated when you switch to transportation EDI transactions, lowering your transaction costs by at least 35%
- A major electronics manufacturer calculates the cost of processing an order manually at $38 compared to just $1.35 for an order processed using EDI
- Errors due to illegible faxes, lost orders or incorrectly taken phone orders are eliminated, saving your staff valuable time from handling data disputes with carriers
- Finally, there is also resources needed in your transportation department, since there no longer has to be an employee present to handle these sorts of tasks. When you just consider solely the time saved by eliminating the need for sending and receiving paper documents, or even the time saved by not having to have someone send and answer emails, the cost benefits of utilizing EDI are very apparent.
The major benefits of EDI are often stated as Speed and Accuracy:
- EDI can speed up your business cycles by 61%. Exchange transactions in minutes instead of the days or weeks of wait time from the postal service
- Improves data quality, delivering at least a 30—40% reduction in transactions with errors—eliminating errors from illegible handwriting, lost faxes/mail and keying and re-keying errors
- Using EDI can reduce the order-to-cash cycle time by more than 20%, improving business partner transactions and relationships
- Further, transportation providers or 3PLs who use transportation EDI on your behalf as a shipper can often handle a much larger task load than those who do not, and they do it with better accuracy.
However, the increase in Business Efficiency is also a major factor:
- Automating paper-based tasks allows your staff to concentrate on higher-value tasks and provides them with the tools to be more productive. Additionally, your transportation management provider can spend more time focused on the task at hand-getting your shipments where they need to go, rather than wasting valuable time sorting through paper or email communications.
- Quick processing of accurate business documents leads to less re-working of orders, fewer stock outs and fewer cancelled orders
- Automating the exchange of data between applications across a supply chain can ensure that business-critical data is sent on time and can be tracked in real time. Sellers benefit from improved cash flow and reduced order-to-cash cycles
- Shortening the order processing and delivery times means that organizations can reduce their inventory levels
In many cases, the greatest transportation EDI benefits come at the Strategic Business Level:
- Enables real-time visibility into the status of your transportation transactions. This in turn enables faster decision-making and improved responsiveness to changing customer and market demands (such as the rise in Just-in-time logistics), and allows businesses to adopt a demand-driven business model rather than a supply-driven one
- Shortens the lead times for product enhancements and new product delivery
- Streamlines your ability to enter new territories and markets. EDI provides a common business language that facilitates business partner onboarding anywhere in the world
- Promotes corporate social responsibility and sustainability by replacing paper-based processes with electronic alternatives. This will both save you money and reduce your CO2 emissions
The sheer amount of information that you can gain through utilizing EDI with your transportation providers is a huge asset to any business. By switching to transportation EDI you will have more information at your fingertips. You can trace orders completely from start to finish, and see where they are at all times. You can have all of the tracing information for each order, see how quickly orders are moving, and if there is down time that doesn’t need to be there. You can also get delivery confirmations to see just how efficient your transportation providers are being with your shipments. This can give you, as the shipper, better insight into whether or not your transportation management services provider is truly meeting your needs.